So you’ve decided to sell your home (For Sale By Owner), and you want to save yourself the 6% listing fee realtors charge for their work. You’ve heard that our Portland market is absolutely amazing and that your home will practically sell itself. Before you step out onto that ledge, consider a few things.
The first thing is an issue of safety. Here are a few tips to help you spot the difference between a serious buyer and somebody who is simply casing your property:
- Make sure you request a pre-approval letter from the potential buyer’s lender, and call that lender to make sure the buyer is fully pre-approved.
- Remove all of your valuables, prescriptions, and weapons from the home or lock them up safely.
- Never show your home alone.
- Always let a trusted friend know who you are showing your home to and when they are coming. Establish a code word that you can use in a text or phone call to tell them to call the police.
- Make sure you have a list of the proper paperwork that your buyer should submit. The implications of a potential lawsuit could cost you thousands of dollars. I’m happy to supply that paperwork list to you upon request, free of charge.
The second thing I’d like to bring your attention to is your profit. You might not pay the 6% commission, but you could be missing out on a larger profit. Data shows that For Sale By Owner homes consistently sell for less money. According to the Economist Outlook from November 9, 2015:
- for agent-assisted homes, the median selling price was $249,000
- for FSBO homes, the median selling price was $210,000
- for FSBO homes when the buyer knew the seller, the median price was $151,900
The information may be from 2015, but the numbers are still relevant today.
Keep in mind that some agents don’t like to show FSBO houses to their prospective buyers. These agents think that owners don’t usually understand the process, nor do they have any paperwork. They think that the buyer’s agent will end up doing the work of two agents–not only simply completing all of the paperwork, but also being the sole negotiator. Sometimes they believe that owners aren’t educated in the selling process, so it will generally be much more work for the buyer’s agent. This thinking limits who will see your home if you don’t have a licensed Realtor to manage your sale.
Just what are you getting for that 6%? More than you thought! Right off the top, 2.5% goes to the buyer’s agent. That leaves 3.5% for the listing agent that you hired, but the listing agent only gets 2.5% of that money. The extra 1% pays for marketing and advertising.
With this marketing and advertising money, your listing agent:
- Prepares your home’s information for RMLS
- Creates print material, including fliers and signs
- Starts a flood of online marketing
- Hires a professional photographer to take photos (drone photos cost even more)
- Schedules and hosts open houses
- Notifies buyer’s agents
- Installs lock boxes for the seller’s safety
If the marketing and advertising costs exceed the allotted 1%, then the agent pays for the difference. It’s a price we are willing to pay to sell your home.
Looking at this information, the 6% you pay to sell your home is a worthwhile investment to make more money. And that’s what this is all about: building your wealth through real estate.
Hopefully you were able to glean a few gems from this blog post. I’m happy to talk with you about how you can strategically build your wealth through real estate. Please click on the Contact tab and let me know how I can help you use real estate to invest in your future.